Seoul deepens fuel tax cut, but raises city gas prices in policy mix vs rising import cost

2022.04.29 12:15:03 | 2022.04.29 12:15:46

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The South Korean government will further cut fuel tax while upping city gas bills to suggest policy bind from fast rising inflation and surging imported fuel cost that has been devastating financial statement of public utility operators.

According to the Ministry of Economy and Finance on Friday, the fuel tax cut from deepen to 30 percent from current 20 percent.

As result, the taxes including 10 percent value added levy on gasoline will be cut from 656 won ($0.52) per liter to 573 won from May 1. Taxes on diesel will also come down from 465 won to 407 won and those on LPG butane from 163 won to 142 won.

The new fuel tax will save a driver of 40 kilometers per day in a gasoline car with 10 kilometers per liter mileage about 10,000 won a month, compared to current level under 20 percent fuel tax cut.

The Korean government has rolled back fuel taxes by 20 percent from November 12 which would have lasted until April 30 to ease burden on consumers grappling with biggest consumer price gains in a decade.

The tax relief would be extended till July 31 in greater scope of 30 percent, or up to the maximum legal limit for such cut, in light of worsening inflationary pressure from protracted Russian war with Ukraine.

Before the fuel tax cut, 820 won in taxes were levied on per liter gasoline, 581 won on diesel, and 203 won on LPG butane.

According to Opinet, an oil price information website under Korea National Oil Corporation (KNOC), average gasoline prices at nationwide petrol stations reached 1,970.02 won per liter. The average price in Seoul was 2,037 won and Jeju 2,026 won.

Diesel price is about 200 won cheaper than gasoline but it is also nearing 2,000 won amid a sharp surge.

Average diesel price across the country was 1,911.98 won per liter with price in the resort Jeju Island reaching 2,053won.

The government however is raising city gas pries to reflect to the surge in import cost.

According to the Ministry of Trade, Industry and Energy on Friday, the country’s city gas prices for houses will be raised by 8.4 percent~9.4 percent from May 1. The rise in the prices will bring up monthly average city gas bill by 2,450 won.

The move comes as KOGAS suffers an increase in accounts receivable of 1.8 trillion won as of end of last year. It was not able to raise prices last year despite higher LNG import price. The accounts receivable refers to unreceived fees from KOGAS payment for LNG import.

By Lee Eun-joo

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